Wal-Mart decision could pose major obstacle for future class-action claims against businesses

By Cezary Podkul,

The Supreme Court’s dismissal of a sex-discrimination class-action lawsuit against Wal-Mart could make it much more difficult for workers to bring similar claims against their employers in the future, lawyers and legal experts say.

The nine-member court decided unanimously Monday that the lawsuit involving 1.5 million former and current female Wal-Mart employees could not proceed as a class-action case in which all the plaintiffs have their claims resolved together against a defendant. That handed Wal-Mart a huge victory as it got the retailer off the hook for billions of dollars in potential liabilities tied to such a large lawsuit.

But a second, more closely watched decision in the case is likely to resonate beyond the world’s largest retailer to the broader interests of U.S. businesses and corporations, analysts say. On a 5-4 vote, the justices ruled that even if the plaintiffs had correctly pursued their lawsuit, the case still would not have qualified as a class-action because the experiences of the women didn’t have enough in common.

This so-called commonality, Justice Antonin Scalia pointed out in the court’s majority opinion, is the “glue” holding together the plaintiffs’ claims of discrimination.

“This was absolutely a victory for business interests,” said Howard Erichson, a professor at Fordham Law School in New York who specializes in conflict litigation. “The Supreme Court demanded a higher level of commonality than previously would have been required. What’s clear now is that plaintiffs really need to be able to show cohesiveness among the claims.”

In Wal-Mart’s case, the plaintiffs argued cohesiveness in claiming that Wal-Mart gave its supervisors too much discretion in matters of promotion and pay, allowing discriminatory practices to take root.

The court rejected that claim, saying that “in a company of Wal-Mart’s size and geographical scope, it is unlikely that all managers would exercise their discretion in a common way” without some uniform policy directing them to do so.

But some worry that the court set the bar too high.

“The only thing that this court would accept as a policy is something akin to a sign that says, ‘Women paid less than men’ or ‘Women promoted less often than men,’” said David Sanford, a managing partner at Sanford Wittels & Heisler in New York who has litigated class-action lawsuits. “I think it makes it much more difficult to bring a case and prevail.”

Others are concerned about the implications the ruling will have for female workers, whose pay discrimination claims formed a central part of the lawsuit.

The Washington-based National Women’s Law Center estimates that working women earn 77 cents for every dollar earned by their male counterparts. The court’s ruling could make it harder to close that gap, because “the class-action mechanism is tremendously important for bringing pay discrimination claims,” said Fatima Goss Graves, the center’s vice president for education and employment.

Some employers, for example, bar employees from asking co-workers how much they’re paid, making it difficult to bring a discrimination claim to trial outside of a class-action setting, Grave said.

“They certainly put in additional hurdles for plaintiffs who are seeking to bring these types of challenges,” Graves said.